Yahoo Finance

• ARR Growth: 12% year-on-year in Q4 2024.

• Free Cash Flow Growth: 25% in Q4 2024.

• SACV: $24.8 million, the strongest SACV quarter ever.

• Maintenance Growth: 12% in Q4 2024.

• Net Debt: $595 million with leverage at 1.3 times.

• Dividend: CHF 1.33 for 2024, up 8% from the previous year.

• Net Profit Growth: 44% in Q4 2024.

• EPS Growth: 47% in Q4 2024.

• Operating Cash Flow: $391 million in 2024.

• Cloud ARR Disclosure: Introduced to reflect client demand for cloud infrastructure.

• Operating Costs: Up 1% in Q4 2024.

• EBIT Margin Growth: 3 percentage points to reach 34% for the full year.

• Net Capitalized Development Costs: Declined to $10 million in 2024 from $18 million in 2023.

• 2025 Guidance: ARR growth of at least 12%, subscription and sales growth of 5%, and free cash flow growth of at least 12%.

• Warning! GuruFocus has detected 7 Warning Signs with TMNSF.

Release Date: February 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Temenos AG (TMNSF) reported strong Q4 2024 results with a 12% year-on-year growth in Annual Recurring Revenue (ARR) and a 25% increase in free cash flow.

• The company achieved its strongest Sales Annual Contract Value (SACV) quarter ever, amounting to $24.8 million.

• Temenos AG (TMNSF) made significant progress in strategic execution, including the sale of Multi-fund to focus on core product offerings.

• The company has successfully transitioned to a subscription model, with ARR now representing 88% of product revenue.

• Temenos AG (TMNSF) announced a dividend increase of 8% for 2024, reflecting confidence in its financial health.

Negative Points

• Deferred revenues were down 5% year-over-year in Q4, showing the lowest sequential uptake in many years.

• The transition to a subscription model has led to a decline in term license contributions, which may impact short-term revenue visibility.

• The sale of Multi-fund, while strategic, resulted in a reduction of $50 million in EBITA targets for 2028.

• The company faces challenges in the US market, requiring significant investment in sales and product adaptation.

• There is a high level of uncertainty in the 2025 guidance, particularly in subscription and SaaS growth, due to market conditions and client demand.

Q & A Highlights

Q: Can you provide more details on the subscription and SaaS guidance for 2025, and how should we think about the growth rates for these components? A: Panagiotis Spiliopoulos, CFO: We have aligned our disclosure with global software players, reflecting the reality of client buying decisions. SaaS ACV was strong in Q4, and we expect a good performance in the coming quarters. Jean-Pierre Brulard, CEO, added that customer demand is strong, especially from large banks in the US and UK, and emphasized the importance of modular applications and multi-cloud environments.